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F I S C A L I M P A C T R E P O R T
SPONSOR HTRC
ORIGINAL DATE
LAST UPDATED
2/22/07
3/11/07 HB 984/HTRCS
SHORT TITLE Cigarette Tax Act Definitions
SB
ANALYST Francis
REVENUE (dollars in thousands)
Recurring
Fund
Estimated Revenue
or Non-Rec
Affected
FY07 FY08 FY09
0.1
Recurring
County Municipal Recreation Fund
0.1
Recurring
County Municipal Cigarette Fund
0.1
Recurring
UNM Cancer Center
0.1
Recurring
NMFA
0.1
Recurring
NMFA /Credit Enhancement Account
0.1
Recurring
NMFA/UNM Health Sciences Center
0.1
Recurring
NMFA / Department of Health Facilities
0.1
Recurring
Rural County Cancer Treatment Fund
0.1
Recurring
General Fund (included CEA)
(Parenthesis ( ) Indicate Revenue Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Department of Health (DOH)
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
The House Taxation and Revenue Committee substitute for House Bill 984 amends the Cigarette
Tax Act to clearly define “cigarettes" as any roll of tobacco or any substitute for tobacco
wrapped in any substance not containing tobacco or that is wrapped in any substance containing
tobacco that is not 100 percent leaf tobacco which for all appearances is marketed and offered as
a cigarette, including bidis and kreteks. The committee substitute also defines cigarettes sold in
packages of not five, ten, twenty or twenty-five as contraband.
The substitute also defines a new excise tax schedule based on the amount of cigarettes in a
package. The table below shows the new schedule.
pg_0002
House Bill 984/HTRCS– Page
2
Table 1: HTRC Substitute for HB984 Schedule of Tax
Excise Tax
Package Size
Per Cigarette Per Package
20-pack equivalent
5 $ 0.1820 $ 0.91
$ 3.64
10 $ 0.0910 $ 0.91
$ 1.82
20 $ 0.0455 $ 0.91
$ 0.91
25 $ 0.0455 $ 1.14
$ 0.91
Source: TRD
FISCAL IMPLICATIONS
TRD reports that this change, allowing cigarettes and cigarette-like products to be sold in smaller
quantities, will have an uncertain but positive impact on cigarette tax revenues.
SIGNIFICANT ISSUES
Department of Health (DOH):
There has been recent resurgence in cigar use, particularly among youth. Since 1998, the
sale and consumption of little cigars has been the fastest growing segment of the cigar
market (NAAG, 2006). One of the reasons for this is that cigarette manufacturers have
attempted to label products as “little cigars" to avoid paying higher cigarette taxes and
make these products more affordable (www.tobaccofreekids.org). Additionally, “little
cigars" are designed to appear very similar to cigarettes, are filtered like many cigarettes
and are marketed with flavorings such as chocolate mint and wild berry.
NF/nt